Aging in Quebec with a decent income is not given to everyone.
Some 409,860 people aged 65 and over live on less than “livable income”. This includes 53% of people living alone, or 284,520 seniors. And among couples, the proportion of poor people is 18%, which affects 125,340 seniors.
This is revealed by three researchers from the Institute for Socioeconomic Research and Information (IRIS), Ève-Lyne Couturier, Guillaume Hébert and Pierre Tircher, in their study Aging in Quebec, findings and solutions for a better retirement system.
What do they mean by “viable income”? It’s the income it takes to lead a “decent life”, and this, depending on the region you live in Quebec, explains Ève-Lyne Couturier.
below living income
For a single person, she says, the viable income varied in 2022 from $25,000 to $35,000 per year, depending on whether you have a storefront in the Montreal area or in Sept-Îles. In the case of an elderly couple, the viable income was around $35,000 (note that these figures will soon be revised upwards to take into account the high inflation that has been going on for more than a year).
By the way, “living income” is just a few thousand dollars higher than the low income cut-off defined by Statistics Canada with its “Market Basket Measure”. That said, when your income is barely above the “viable income” that does not allow you to get out of poverty.
It should therefore come as no surprise to see more and more elderly people on the labor market, it is a simple matter of financial survival.
“The employment rate of people at the end of their careers and people aged 65 and over has been growing steadily since the early 2000s. In 2022, more than 20% of people aged 65 to 69 were employed”, say the IRIS researchers.
Another major observation: “Seniors of all income categories retire at age 65 or over, but it is those who are in the poorest 25% who are the most likely in proportion to postpone retirement beyond the legal age. »
Basic coverage
Fortunately, in Canada, people aged 65 and over can at least count on a basic minimum income to live on.
I am of course referring to the Old Age Security Pension (OAS) and the Guaranteed Income Supplement (GIS). Currently, the PSV brings in $8,292 and the GIS $12,385 (maximum), for a total of $20,677 per year for a single person aged 65 to 74. Those 75 and over are entitled to a small PSV bonus of $829.
For couples aged 65 to 74, the maximum income that can be drawn from OAS and GIS is $31,494 (i.e. OAS of $8,292 and GIS of $7,455 for each). Those aged 75 and over also benefit from the bonus of $829 per person.
You will notice that these two basic incomes (PSV and SRG) of our retirement system bring a total amount lower than the viable income determined by the IRIS.
As additional retirement income from a public plan, is added the pension from the QPP (Quebec Pension Plan), the amount of which will vary according to the contributions (employees, employers) made according to insurable earnings under the mandatory plan. . The maximum QPP pension at age 65 is $15,679 per year.
Please note: it is important to note that the amount of the Guaranteed Income Supplement (GIS) will be reduced at the rate of 50 cents per dollar of income from the QPP or other income excluding OAS.
Private plans
To “pay” for a retirement under reasonable conditions, one must have income that is significantly higher than the income from our public plans.
The luckiest are the retirees who benefit from a private employer pension plan, as is particularly the case for employees of public and parapublic services, and of large companies.
These private plans provide people aged 65 and over about 31% of retirement income, compared to 50% for public plans.
For their part, RRSPs represent a “marginal share” with less than 10%.
But this source of private retirement income is not protected against inflation.
The solution
The authors of the study, Ève-Lyne Couturier, Guillaume Hébert and Pierre Tircher, would like us to set up a pension system similar to that of Denmark, which has, according to them, “one of the perform better through quasi-mandatory employer-sponsored schemes”.
This Danish system allows pensioners to achieve a replacement rate of their work income which exceeds 120% of half the average income in Denmark or which reaches 60% when the income is twice the average income.
In order to make up for the low coverage of employer pension plans here in Quebec, the government has chosen instead to develop VRSPs (voluntary retirement savings plans), where employees contribute to their retirement through a deduction on their salary.
In the eyes of the three IRIS researchers, VRSPs are “low-quality plans in which employers are not obliged to contribute”.
To improve the economic situation of workers in retirement, they recommend changing the VRSPs to make employers’ contributions compulsory and guarantee a level of benefits to people who contribute to them.
Finally, here is a compliment to the Government of Quebec: IRIS salutes the income support strategy which integrates salaried work as a “pillar for retirement”, among other things, thanks to the tax credit for career extension.
